When Will the Container Crisis Ease?
The turnaround and shipping of cargo was deemed quite efficient before the pandemic. While there are no easy ways out of the crisis, experts say it may be another year before the situation gets better. Last week alone, 87 commercial ships queued at the ports of Los Angeles and Long Beach, most of which arriving from China and carrying clothes, electronics, consumer goods, perishable foodstuff, and raw materials for manufacturing plants. Major ports in Europe, including Felixstowe and Rotterdam are facing the same problem.
Why Port Congestions Occur
In such numbers, it takes weeks before cargo vessels get a berth and weeks before they get unloaded for trucks to reach warehouses for storage and distribution. It is months before the empty containers are loaded on a cargo ship again.
Before the pandemic, a ship would unload cargo, reload empty containers, and sail to the next port of call. Cargo would be promptly shipped by truck to its final destination. Now there is delay at every stage of the supply chain. To make matters worse, ships lack space for empty boxes, resulting in containers being stuck at transshipment facilities, ports, and depots. This has already created container shortages in India and China.
Way out of the Crisis?
Port executives and shipping experts warn that the container crisis will take another year to end, despite the fact that major carriers have ordered new cargo ships and containers. The problem is that augmenting stock will not end the crisis in India and other parts of the world. There are disruptions throughout the entire supply chain, trade flow imbalances, reduction of slots on cargo vessels, and shortages of truck drivers. Some commercial vessels are also undergoing repairs and refurbishment.
The current crisis started when consumers began spending their extra pandemic savings on consumer goods from online platforms. The fiscal stimulus significantly increased demand and consumption, with spending shifting from travel and services to consumer goods. Most of the items ordered had to be transported in containers from South-East Asia.
The crisis escalated when western countries began stocking up before the Christmas holidays. Carriers faced increased pressure when manufacturers restated production and ordering parts and raw materials. According to experts, the crisis will not end before the underlying causes are dealt with. Empty containers need to be shipped back to exporting countries from ports and inland depots in Europe and the US. Additionally, containers now have many other uses than shipping goods. They are used to build both high-end modular homes and makeshift prisons, clinics, restaurants, and schools. Containers are also transformed into temporary housing for homeless persons and multifamily apartments. The fact is that transporting empty boxes and getting them reloaded on ships is less profitable.
Shortages of truck drivers and port workers also contribute to the piling of empty and loaded containers at depots, warehouses, and ports. To ease the crisis, workforce shortages need to be addressed at every stage of the supply chain.